Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- An issue of common stock is expected to pay a dividend of $5.15 at the end of the 1973 year. Its growth rate is equal to 6%. If the required rate of return is 10%, what is its current price? $36.92 $96.00 None of these options are correct $128.75arrow_forwardA stock is expected to pay a dividend of $3.00 per share in year 1. The stock price after one year is expected to be $80 per share. The equity cost of capital is 10%, whereas the risk-free rate is 2%. What is the current stock price? O $72.73 $75.45 $81.37 $830.00arrow_forwardE E-Eyes.com just issued some new preferred stock. The issue will pay an annual dividend of $16 in perpetuity, beginning 11 years from now. If the market requires a 12 percent return on this investment, how much does a share of preferred stock cost today? Multiple Choice $45.08 $133.33 $38.33 $40.78 R T Uarrow_forward
- A stock is expected to pay dividends of $1.45 per share in Year 1 and $1.68 per share in Year 2. After that, the dividend is expected to increase by 3.5% annually. What is the current value of the stock at a discount rate of 15% (in $ dollars)? 24 A Moving to another question will save this response. «< Question 21 of 30 Esc DII F5 F1 F2 F3 F4 F6 23 2$ 4 % 2 3 5arrow_forwardCarter's preferred stock pays a dividend of $1.15 per quarter. If the price of the stock is $62.50, what is its nominal (not effective) annual rate of return? a. 1.84% b. 3.68% c. 7.57% d. 3.71% e. 7.36%arrow_forwardA stock is expected to pay a dividend next year of $2.1. The dividend amount is expected to grow at an annual rate of 6.9% indefinitely. Assuming a required return on the stock of 10.8% in the future, the dividend yield on the stock is %. Margin of error for correct responses: +/- .05 Rounding and Formatting instructions: Do not enter dollar signs, percent signs, commas, X, or any words in your response. Do not round any intermediate work, but round your *final* response to 2 decimal places (example: if your answer is 12.3456, 12.3456%, or $12.3456, you should enter 12.35).arrow_forward
- Calculate today's stock price, based on the following information: Growth rate of dividends years 1 and 2 = 20% Growth rate of dividends years 3 and 4 = 15% Growth rate of dividends year 5 moving forward = 5% Last dividend paid = $1.00 Required rate of return based on the riskiness of this stock = 12% (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Do not input a c Numeric Responsearrow_forwardHow much would you pay for a Summerhill common stock that pays a dividend of $1.8? You believe that Summerhill will grow at the rate of 11% for the long term, and you would require a return of 13% from such a stock.a. $ 99.90b. $90.00c. $ 15.37d. $88.27e. $ 14.45arrow_forwardABC common stock is expected to pay a dividend of $3 a share at the end of the year; the required rate of return is 10%. The dividend is expected to grow at some constant rate g, and the stock currently sells for $100 a share. Assuming the market is in equilibrium, the stock's price at the end of year 5 will be $_______. $60.83 $140.26 $54.12 $115.43arrow_forward
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